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Cary School Board President Asks Jack Franks, “Where’s the Plan?”

The following comment from Cary School Board President Scott Coffey is too insightful not to share further than the comment section of McHenry County Blog:

County Board Has No Control Over Spending by Any Other Tax District

Cary Grade School District 26 Operating Funds in FY16 spent 26% less than in FY10

Jack Franks

Since the County has no control over spending by the school district or any other taxing body on someone’s tax bill, shouldn’t the first question to Mr. Franks be:

How does he specifically plan to cut the County’s Operating Expenses by 10% in order to deliver a 10% property tax promise to the residents?

If plans to implement Operating Expense cuts don’t precede a decision on a 10% Levy cut, Mr. Franks is setting up the County for fiscal disaster by creating a large, structural operating deficit.

With a total levy of $76.3 million, Mr. Franks needs to find $7.6 million in savings to realize his Cut 10 goal.

Having gone through the process myself with the D-26 turnaround process starting in 2010, I know that it has to come from dozens of different areas.

Somewhere I have a list of almost a hundred items that we evaluated/implemented in order to drive down costs, because there is no single lever to pull which drives you to a cost reduction target of that magnitude.

But it can be done.

D-26 Operating Funds in FY16 spent 26% less than in FY10.

To Cut 10, it requires a plan to get there and the will power to implement the plan.

So, first things first:

Where’s the Plan?

Mike Walkup

= = = = =
Of course, the current Republican County Board could increase the $76.3 million tax levy.

That would mean that Franks would have to cut more than $7.6 million to achieve his shrinking campaign promise.

And the easy cut has already been made–the $3 million that Jack Franks opponent Mike Walkup took the initiative to zero out.

If the County Board puts in the $2.75 million that appeared at the Finance Committee, that would give Franks an easy target for about a third of what he says he wants to cut.

Recently appointed County Board member Chris Christensen (replacing Nick Provenzano), has just resigned from the Cary Grade School Board.

Comments

The game that keeps getting played in many property taxing districts in Illinois is not fulling funding pensions.

Much of that has to do with the legislature hiking pension benefits and the boards hiking salaries over the last 46 years (after the pension sentence was added to the state constitution), which hiked the pension contributions and payouts.

The pension sentence lacked a taxpayer protection clause: no benefit hikes until pensions fully funded, and salary hikes should have been little to none until pensions fully funded.

McHenry County has two IMRF pension plans.

Looking at the FY 2015 CAFR.

IMRF Regular has a net pension liability (approximate unfunded liability) of $12,678,371. It is 93.74% funded.

IMRF SLEP (Sheriff Law Enforcement Plan) has a net pension liability of $19,247,853. It is 83.65% funded.

Total $31,926,224.

+++++

$31,926,224 is supposed to be in the pension funds to meet actuarial assumptions, but is not.

That is $31.9 Million Dollars that is returning zero investment return.

That taxpayers make up 100% of the shortfall in the investment return.

Even if the $31.9 Million was in the fund, investors still make up 100% of any investment return shortfall.

Second, the County separates itself into Governmental Activities and Business Activities when reporting financials.

For some reason the county uses the words debt certificates, and the conservation district uses the word bonds, in the financial reporting below.

I included them in the same row.

In another technical and semantics issue, the Conservation District reported unfunded liability as they had not yet implemented GASB 68 net pension liability, and the county reported GASB 68 net pension liability.

Once again, I combined the two into the same row.

The Conservation District IMRF pension fund as of December 31, 2014 was 67.81% funded.

That’s very low for an IMRF pension.

++++++++

So let’s attempt to update the numbers.

Page 77 of FY 2015 CAFR pdf for the County.

Page 97 of FY 2015 CAFR pdf for the Conservation District.

Page 100 of FY 2015 CAFR pdf for the Conservation District pensions.

Balance November 30, 2015 for the County.

Balance March 31, 2015 for the Conservation District

Balance December 31, 2014 for the Conservation District pensions.

++++

Long Term Obligation – governmental activities – business type activities – Conservation District – Total

In the FY 2015 CAFR, the Conservation District Debt Service Schedule on page 99 of the pdf, lumps years 2021 – 2025 into a lump sum of $50M Principal and $14,388,500 Interest.

And lumps 2026 – 2027 into a lump sump of $25,985,000 Principal and $1,972,750 Interest.

Instead of line items for each year.

+++++++

McHenry County taxpayers owe $218.5M to McHenry County.

+++++++

So a plan to cut McHenry County property taxes 10% ($7.6M) would have to include a payment plan for $218.5M, keeping in mind, the longer the IOU is extended, the more interest that will ultimately be paid by taxpayers.